CHAPTER 2 RESEARCH METHODOLOGY -...
Transcript of CHAPTER 2 RESEARCH METHODOLOGY -...
CHAPTER 2
RESEARCH METHODOLOGY
44
2. RESEARCH METHODOLOGY
2.1. INTRODUCTION
Research is commonly known to be a continuous search for
knowledge. Research is an art of scientific search for specific
information. According to Clifford Woody, “research comprises
defining and redefining problems, formulating hypothesis or
suggested solutions, collecting, organizing and evaluating data,
making deductions and reaching conclusion and further testing the
conclusions to determine whether they fit the formulating
hypothesis”. Research Methodology is a scientific and systematic
way of finding solutions to a problem.
In the present study, researcher has gone through various
steps as mentioned above, to analyze the research associated
problem along with its reasons. For undertaking any kind of
research, researcher must know various research techniques like
mean, mode, median, frequency distribution, standard deviation or
Chi-Square. Thereafter researcher need to analyze which of these
techniques is relevant to his or her research. Thus for any systematic
research study, a scientific approach is necessary. It was therefore,
essential to conceive and plan a systematic design to arrive at an
45
appropriate conclusion. All the business undertakings are operating
in the world of uncertainty, but research design, more than any other
procedure, can minimize the degree of uncertainty to a greater
extent.
2.2 OBJECTIVES OF THE STUDY
To Study the existing pension schemes of Government as well as
selected private insurance companies.
To study the customer’s response towards the existing pension
schemes of selected insurance companies
To compare the risk, return and liquidity aspects of the pension
products.
To study the needs of the customer with reference to the pension
offerings by insurer.
To suggest vital improvements for existing pension schemes
2.3 HYPOTHESIS OF THE STUDY
The supply of pension products is matching with the customers’
needs.
46
The total shift from Defined Benefit to Defined Contribution is
desirable from the viewpoint of customer.
The Pension Fund Regulatory & Development Authority
(PFRDA) Reforms are in tune with the needs and preferences of
Customer.
2.4 RESEARCH DESIGN
Research design is an outline of research study, which
indicates what researcher will do from writing the hypothesis and its
operational implications to the final analysis of data. “A research
design is the arrangement of conditions for collection and analysis of
data in a manner that aims to combine relevance to the research
purpose with economy in procedure1. Research design constitutes
decision regarding what, why, where, when and how concerning an
inquiry or a research study.
Overall research design may be divided into the following
parts2:
a. Sampling Design: This deals with the method of selecting
items to be observed for researcher’s study 1 Clair Selltiz and others, Research Methods in Social Sciences, (1962), pg. 50 published by Holt, New York 2 C.R. Kothari, Research Methodology, Methods and Techniques, New Age International (P) Ltd., Second Edition (2004), pg. 31
47
b. Operational design: It states the techniques by which
procedures specified in sampling, statistical and observational
designs can be carried out
c. Observational Design: It relates to the conditions under which
the observations are made.
d. Statistical Design: It is concerned with the questions of how
many items are to be observed and how the information and
data gathered are to be analyzed.
2.4.1 SAMPLING DESIGN
A sample design is a definite plan for obtaining a sample
from a given population. No researcher can study the entire
population and hence selects a few individuals belonging to a
population for the purpose of his / her study. These selected
individuals form a sample and while selecting these individuals the
researcher should consider the following facts:
a) The definition of the population
b) Size of the sample
c) Representativeness of the sample.
There are different types of sample designs based on two
factors such as representation basis and element selection technique.
48
For representation basis, the sample may be Probability or non-
probability sampling. Probability sampling relates with random
selection while non-probability with the non-random sampling.
The study was based on analysis of primary and secondary
data. The sample size consisted of data collected from policyholders
of pension products, prospective buyers of pension products and
experts in the field of pension.
The total population as per Census 20113 for Pune city is
3,11,5,431. The researcher selected random sample of 503 which
includes policyholders as well as prospective buyers from the urban
population. The sample percentage to total population is 0.016%.
2.4.1.1 RANDOM SAMPLING METHOD
Probability sampling is also known as ‘random sampling’.
Under this sampling design, every item of the universe has an equal
chance of inclusion in the sample. The results obtained from
probability or random sampling can be assured in terms of
probability i.e. we can measure the errors of estimation or the
significance of results obtained from a random sample, and this fact
brings out the superiority of random sampling design over the
3 Census 2011 – Population for Pune city- www.census2011.co.in
49
deliberate sampling design. Random sampling ensures the law of
Statistical Regularity4, which states that if on an average the sample
chosen is a random one, the sample will have the same composition
and characteristics as the universe.
Hence, random sampling is considered as simplest possible
sampling method and is most appropriate when the population is
more or less homogeneous with respect to the characteristics under
the study. Keeping this in view the researcher used random sampling
method for selection of a sample for the present study.
To ensure reliability of the results, the primary analysis data
was collected for policyholders of pension products and prospective
buyers of pension products from all corners of Pune city for the
period January 2011 to March 2012. The secondary data analysis
covered pension products from the year 2005 to 2010. The product
brochures were collected from selected insurance companies
predominant in pension market in India either in person or
downloaded from the Internet.
Sample size consisted of 103 policyholders of pension
products and 400 prospective buyers of pension products of Pune
city were covered by personal interviews. Considering the 4 C.R. Kothari, Research Methodology,New Age International (P) Ltd., Second Edition (2006), Page 60
50
importance of the sampling in the study, the care was taken to
identify the sample which was true representative of the class. . The
homogeneity of the sample was determined on the basis of profile of
the LIC policyholders as they are the dominant players of the
pension market in India.
2.4.1.2 PILOT STUDY
For testing Hypotheses 2 & 3, the researcher conducted Pilot
Study by doing initial survey and interviewed 15-20 newly joined
employees of Central Government for whom the New Pension
System (NPS) was made compulsory. Surprisingly, it was noticed
that the employees could not answer a single question, as they were
unaware about the details of the NPS. Hence, the researcher
designed the questionnaire for the experts in the field of pension. A
method similar to Delphi method 5 was used for testing the
hypothesis related to New Pension System by conducting focused
interviews of experts in the field of insurance and senior executives
of insurance companies. In all 18 experts were interviewed, the list
of which is mentioned below:
5 Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts - Norman Dalkey, Olaf Helmer (1963) An Experimental Application of the Delphi Method to the use of experts - Management Science, 9(3), Apr 1963, pp 458-467
51
LIST OF EXPERTS Sr.No. Name of the Expert
1 Shri S.P. Subhedar Advisor, ICICI Prudential, Ex-MD, Life Insurance Corporation of India
2 Shri Arvind Kumar Joint Secretary, Ministry of Finance, Government of India Director, National Insurance Academy
3 Shri Balram Bhagat CEO, UTI Retirement Solutions
4 Shri Arpan Thanawala, Actuary & Consultant – Thanawala Consultancy Services
5 Shri Chandrashekhar Tilak, Vice President, National Securities Depository Limited
6 Shri G.N. Agarwal, Actuary, Future Generali Life Insurance Co. Ltd.
7 Shri Jagdish Salunkhe, Advisor, MERCER, Ex-Chairman, Life Insurance Corporation of India
8 Shri N. Lakshmanan, Actuary, HDFC Ergo General Insurance Co. Ltd., Ex-ED, Life Insurance Corporation of India
9 Shri. K. Seshagiridhar, SDM (P&GS), Life Insurance Corporation of India
10 Smt. Latha, Actuary, Secretary (P&GS), Life Insurance Corporation of India
11 Shri Niraj Kumar, Vice President, Bajaj Allianz Life Insurance Co. Ltd.
12 Smt. Sarita Garg, Secretary (P&GS), Life Insurance Corporation of India
13 Shri Vikash Raj, CEO, Infrastructure Development Finance Company
14 Shri R. Siddiqui, Jt.General Manager, LIC Pension Fund Ltd.
*15 Executive Officer, Rajasthan State Insurance and PF *16 Executive Officer, Rajasthan State Insurance and PF 17 Smt. Madhuri Kulkarni,
Chief (Actuarial), Life Insurance Corporation of India 18 Smt. Meghana Baji,
Senior Vice President, ICICI Prudential Life Insurance Co. Ltd.
* The name of the officers was not disclosed on their request.
52
Besides field investigations, the researcher also relied on
discussions with experts, PFRDA’s officials, actuaries, academicians
and retired officials to develop a clear understanding of the
dynamics of the scheme.
2.4.2 OPERATIONAL DESIGN
The operational design deals with techniques by which the
procedures satisfied in sampling and advanced decisions about
operational procedures.
The following Figure 2 depicts the conceptualization of data
analysis of customer preferences and expectation evaluation
undertaken by the researcher for the present study.
53
Figure 2: CONCEPTUALIZATION OF DATA ANALYSIS CUSTOMER PREFERENCES AND EXPECTATIONS EVALUATION
Additionally, the above tests replicated on the six indices as
follows:
1. Customer Perception about Pension Provider
2. Customer Perception about Pension Product
3. Customer Expectations from the pension products
4. Needs & Preferences of Customers of Pension Products
5. Service Experience
6. Overall Buying Experience
54
A factor analysis was made on the resulting scores. The mean
scores on a per item basis were plotted on the Customer
Expectations & Perception Grid set out as Figure 3.
Figure 3: CUSTOMER EXPECTATIONS & PERCEPTION GRID
2.4.3 OBSERVATION DESIGN
This deals with different data collection methods. For data
collection, the researcher used primary and secondary sources of
data. The researcher used a `survey method’ for collection of
primary data.
55
2.4.3.1 OBSERVATION METHOD
In research design, many times the observation helps the
researcher to reduce complexities and to make the research work
more fruitful. When observation is used for research purpose, it
becomes a scientific tool for data collection and it serves for a
formulated research purpose. Under the observation method, the
information is sought by way of investigator’s own direct
observation without asking from the respondent. The advantages of
this method are, information obtained through observations relates
with current happenings, subjective bias is eliminated, is
independent of respondents and relatively less demanding for active
co-operation from others. The limitations for this method are,
information provided is limited and obstacles created may be for
unforeseen factors and may hamper data collection effectively if
concerned resources are not directly accessible6.
Observation method was useful for the researcher while
conducting pilot study.
Three questionnaires were designed to collect information as
follows: 6 C.R. Kothari, Research Methodology, Methods and Techniques, New Age International (P) Ltd., Second Edition (2004), pp 95-112
56
1. Questionnaire for Policyholders of pension products
2. Questionnaire for Prospective Buyers of pension products
3. Questionnaire for Experts in the field of Pension
The questionnaires used in the field survey are included in
Appendices.
2.4.4 STATISTICAL DESIGN
Descriptive research involves gathering data that describe
events and then organizes, tabulates, depicts and describes the data
collection 7 . Statistical tools play an important role in research.
Statistics helps the researcher in designing the research, analyzing its
data and drawing conclusions there from. Statistics is divided into
major areas that are Descriptive statistics and inferential statistics.
Descriptive statistics deals with development of certain indices from
raw data while inferential statistics deals with the process of
generalization.
The methods of collecting data for descriptive research can be
employed singly or in various combinations, depending on the
research questions at hand. Descriptive research often calls upon
7 (Glass & Hopkins,) – Descriptive Research - 1984
57
quasi-experimental research design 8 . Some of the common data
collection methods applied to questions within the realm of
descriptive research includes surveys, interviews and observation.
The study undertaken by the researcher was a descriptive type
of research making use of surveys, interviews and observation
methods.
2.5 DETERMINATION OF THE REQUISITE DATA
Keeping in mind the broad objectives of the study, it was first
attempted to identify the data / information requirements which
included:
1. Brochures of Traditional and ULIPs pension schemes in
India.
2. Related literature on Pension.
3. Initiatives taken by Central and State Government of India
based on the recommendations of the various committees /
study groups.
2.6 COLLECTION OF PRIMARY DATA
Primary data are those which are collected for the first time 8 (Campbell & Stanley) - quasi-experimental research design - 1963
58
and which could be original in character. The secondary data are
those which have already been collected by someone else and which
have already been passed through the statistical process.
There are several methods of data collection, particularly in
descriptive researches. This includes the following methods.
2.6.1 INTERVIEW METHOD
This type of data collection method needs direct interaction
with the respondents. This interaction involves presentation of oral-
verbal stimuli and response in terms of oral-verbal communications.
The method of collecting information through personal interviews is
usually carried out in a structured way. This method can be used
through personal interview or telephonic interviews. Personal
interview requires interaction between minimum two people where
one is interviewer while the other could be an interviewee. This
generally involves face-to-face contact with direct or indirect,
personal or group investigation. For telephonic interview the
interviewer collects information on telephone itself. This is the
cheapest, fastest and flexible method.
This method was also of great help to the researcher as she
could fill up some of the questionnaires through the direct interviews
59
with the respondents. The Researcher had some informative
discussions during this interview process. This method was also
found to be very useful for the researcher for Pilot survey.
Apart from getting the two questionnaires for policyholders
and prospective buyers filled through interviews, the researcher had
to interview 18 experts in the field of pension who were handling
directly or indirectly the New Pension System of PFRDA. This
method helped the researcher to refine the questionnaires. As most
of the experts were from Mumbai, the researcher visited Mumbai
frequently by taking prior appointments as all of them were of high
stature.
2.6.2 COLLECTION OF DATA THROUGH
QUESTIONNAIRES (SURVEY METHOD)
This method of data collection is quite common and popular
and it is applicable for detailed enquiries. Questionnaire is a set of
questions focused on specific topic or specialized area. This
questionnaire can be divided into subsets depending on the sub-
topics of specialized area. This method is generally adopted by
research workers, private and public organizations as well as
government organizations also. In this method, usually a
60
questionnaire is sent to a respondent with a request to answer the
questions and return the questionnaire. The respondents have to
answer the questions on their own. As this is the era of information
technology, the method of collecting data by mailing the
questionnaires is most extensively employed in various economic
and business surveys. The major advantages of this method are no
geographical constraints for global survey, low cost; respondents get
sufficient time to go through the questionnaire and can handle large
samples in order to get reliable and precise results. The only major
disadvantage is that it is time-consuming as compared to other
methods of data collection where constant follow-up is needed.
Questionnaires were collected from the respondents using a
pre-tested structured interview schedule. Based on the methodology
and impact assessment framework, data from policyholders and
prospective buyers was collected on following parameters:
Personal Information (address, Dependent, Education,
Occupation, Gender)
Annual income
Perception about the pension provider
Perception about pension product
Needs and preferences
61
Customer expectations from the pension product
Service expectations
Overall buying experience.
The researcher adopted the above-mentioned method of data
collection for her research considering the advantages.
Primary data was collected during January 2011 to March
2012 from 103 policyholders of pension products and 400
prospective buyers of pension products. All twenty four life
insurance companies as per Insurance Regulatory and Development
Authority’s website have set up their businesses in India and branch
offices at Pune. Life Insurance Corporation of India, being the
major player in the market was an important company for studying
the pension products. The researcher also selected randomly six life
insurance companies, viz. HDFC Standard Life Insurance Co. Ltd.,
ICICI Prudential Life Insurance Co. Ltd., SBI Life Insurance Co.
Ltd., IDBI Federal Life Insurance Co. Ltd., TATA AIA Life
Insurance Co. Ltd., Kotak Mahindra Old Mutual Life Insurance Ltd.
The main objective of the field survey was to get first hand
information and perception of beneficiaries, non-beneficiaries,
insurance companies, regulators of pension products and NPS.
62
Data was collected on random sample basis all over Pune city
by interviewing the people who had bought pension policy called
policyholders and people who had not bought pension policy called
prospective buyers.
2.7 COLLECTION OF SECONDARY DATA
Secondary data represents a very powerful tool for the
researcher as entire research work is carried out on the basis of
secondary data. It is nothing but the backbone of research work.
Secondary data is the one which has already been collected and
analyzed by someone else. Usually this analyzed data is available in
the published form.
Secondary data on pension was collected from Insurance
Companies & from the Internet in the form of product brochures.
The researcher made an extensive use of statistical (secondary
and published) data and detailed information about pension schemes
available with selected insurance companies.
The researcher also collected data from various sources of
information:
63
National Insurance Academy Library, Pune
Shreemati Nathibai Damodar Thackersey Women’s University
Library, Pune
OASIS (Old Age Social and Income Security) Report, Ministry
of Social Justice and Empowerment, Government of India.
Book on `Facing the Future - Indian Pension Systems’ - Indian
Institute of Management -Bangalore & ING Vysya
Employee Provident Fund Organization (EPFO) Handbook &
Reports
Research papers of Indian Institute of Management -Bangalore
Report on New Pension System, G.N. Bajpai
World Bank Report– 1994 – “Averting the Old Age Crisis” and
other World Bank reports.
Invest India Economic Foundation (IIEF) papers and articles
The researcher tried to study available literature on pension
from various books, magazines, research papers and newspapers.
The following websites were browsed:
www.pfrda.org.in
www.irdaindia.org
www.pensionreform.org
www.pbgc.gov
www.indiapensiongroup.com
www.india.gov.in/citizen/senior_citizen/acts_pensions.php
64
www.epfindia.nic.in
www.iief.com
www.pensionersportal.gov.in
www.worldbank.org
2.8 VERIFICATION OF THE DATA
In the present study, the collected data was verified with the
support of following characteristics:
• Reliability of Data
• Suitability of Data
• Adequacy of Data
• Instrumentation
• Testing
2.8.1 RELIABILITY OF DATA
Reliability means the consistency or repeatability of the
measure. Reliability refers to the confidence we can place on the
measuring instrument to give the same numeric value when the
measurement is repeated on the same subject. Reliability is the
extent to which an experiment, test, or any measuring procedure
yields the same result on repeated trials. Without the agreement of
independent observers to be able to replicate research procedures, or
the ability to use research tools and procedures that yield consistent
65
measurements, researchers would be unable to satisfactorily draw
conclusions, formulate theories, or make claims about the
generalizability of their research. Following questions were taken
into consideration by the researcher while testing the data.
Who collected the data?
What were the sources of data?
Whether the Methods of data collection were proper?
At what time the data was collected?
Was there any bias for compilation?
What was the degree of accuracy?
Survey research presents all subjects with a standardized
stimulus, and so goes a long way toward eliminating unreliability in
the researcher's observations. Careful wording, format, content, etc.
can reduce significantly the subject's own unreliability.
2.8.2 SUITABILITY OF DATA
This relates with appropriateness of data with the suitable
enquiry. If collected data does not match with the content of specific
research topic, then it is called as Unsuitable data. Partial data can be
extracted from the source if the researcher finds it appropriate with
the content of research topic. Considering object, scope and nature
66
of research, broad study is carried out on the guidelines of the
research guide.
The responses relevant to the subject matter of study which
were received from various respondents were analyzed and the
inputs which were given by the respondents being irrelevant to the
subject matter of study were not considered.
2.8.3 ADEQUACY OF DATA
Adequacy is nothing but sufficient availability of data. If the
level of accuracy required for utilizing the data is not adequate, then
the researcher should not use this data for research purpose.
Researcher had used the available data after checking reliability,
availability and suitability of data.
For the adequacy of data, the researcher had made pilot
survey of policyholders and identified people who could provide
appropriate and adequate information for responding the questions.
2.8.4 INSTRUMENTATION
Instrumentation can often be viewed as a simple input device
or method. This is a process of collection of functions and their
applications for the purpose of measuring, monitoring and
67
controlling activities. The structured questionnaires designed by the
researcher were the important instruments for handling all the
processes mentioned above.
2.8.5 TESTING
For the test of validity the researcher carried out survey by a
pilot test. The test was performed through questionnaire by
interviewing policyholders of pension products in order to check
whether the questionnaire was precise or not. Researcher had
convinced the users as well as the prospective buyers of the pension
products that the results of this research would be helpful to
insurance companies for devising a good pension product.
2.9 TOOLS FOR DATA ANALYSIS
The data, after collection, has to be processed and analyzed in
accordance with the outline laid down for the purpose at the time of
developing the research plan. Processing implies editing, coding,
classification and tabulation of collected data. Analysis of data
involves a number of closely related operations, which are
performed with the purpose of summarizing the collected data and
organizing these in such a manner that they answer the research
question(s).
68
For the purpose of the present study the researcher used data
analysis tools such as Statistical Product and Service Solutions
(SPSS –Statistical) software & Advanced Microsoft Excel to analyze
the data. Data collected was segregated and then consolidated with
Microsoft Excel and presented using simple analysis in terms of
averages, percentages, mean, median, standard deviation, tabular
analysis, pie charts, bar diagrams, tables and graphs.
2.10 LIMITATIONS OF THE STUDY
The researcher tried at the grass root level to get first hand
data through separate questionnaire designed for existing
policyholders and prospective buyers of pension products. Some of
the insurance companies were reluctant to give policyholders’ data
for the reason of confidentiality.
The responses relevant to the subject matter of study, which
were received from various respondents, were analyzed and the
inputs / responses which were given by the respondents being
irrelevant or incomplete to the subject matter of study were not
considered.
The researcher was solely engaged for the study and hence
faced the limitations of cost, time and other resources which are the
69
common roadblocks for the individual researcher in obtaining and
cleaning the comprehensive data.
Interviewing the experts in the field of pension as per their
convenience and the researchers availability during that time due to
service was really a tough job.
In view of shouldering various social and official
responsibilities, researcher found it difficult to maintain a work-life
balance. However, the researcher prioritized to devote appropriate
length of time by availing periodic leave and ensured optimum
efforts for successful completion of the study.